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Again, you're thinking of retail investors being like herd of stupid sheep. First of all, very elitist from you (even though I suppose you're one of them too).
by borism 16y ago
Again, you're thinking of retail investors being like herd of stupid sheep.
First of all, very elitist from you (even though I suppose you're one of them too).
And second, actually not true. As I said, no (or almost no if you like) retail investor is stupid. All they wanted to do is to protect their positions at a reasonable level depending on variety of factors like entry price, relation of the price to some moving average etc. etc. So calling that stupid and being equal to "offering a bargain" or giving Mr. Market "wrong information" is itself stupid at best.
- lotharbot 16y agoI do not believe retail investors are like a "herd of stupid sheep"; please do not put words into my mouth. I believe some retail investors attempted to "protect their positions at a reasonable level" by using the wrong tool, namely, a "stop loss" order (which provides a sale at any price) rather than, say, a "stop limit" order (which provides a sale with a price floor.) This was a bad decision on their part, which in the case of the "flash crash" led to them offering their stocks at bargain prices (like Accenture for a penny.) Simply using the right tool would have protected these investors from taking such severe portfolio hits.
- sireat 16y agoUnfortunately, it has been drilled into retail investors to use stop-loss orders. Stop-limit orders are also more expensive for a retail investor. Hopefully, some good came out of this and people became more careful.
- borism 16y agoWhich retail brokers charge more for using stop limit? Never seen one that does.